METALS-Shanghai copper falls almost 1 pct, LME gains

* ShFE copper falls, LME pares previous session's losses

* China PMI positive; specs look to equities for direction

* Investors keen on zinc; stocks seen up on contango trade

SINGAPORE, Nov 2 - Shanghai copper fell 0.8 cent on Monday, chasing losses in London in the previous session after weak U.S. consumer data and rising risk aversion.

U.S. consumer spending fell last month and sentiment turned gloomier in October, data showed on Friday. But factory activity in the U.S. Midwest expanded for the first time in more than a year, although employment conditions worsened.

That sent a key gauge of Wall Street angst, the CBOE Volatility Index, up almost 24 percent in its biggest single-day spike since October 2008, while equities, oil and metals sold off.

"I am a little surprised about the extent of the sell-off. Sentiment has been softening for a while now. Maybe the worry is that it reflects the chance of a more restrained recovery," said David Moore, commodities strategist at Commonwealth Bank of Australia in Sydney.

Moore said the market would pore over a series of U.S. numbers this week including Institute of Supply Managment numbers, a Federal Reserve rate decision, payrolls numbers and automotive sales.

China's vast manufacturing sector expanded in October at its fastest in 18 months, a survey showed on Sunday, and economists said they expected the momentum to be sustained in coming months.

On Monday, HSBC's read for China PMI rose to an 18-month high in October of 55.4 from 55.0 in September. It was the seventh month in a row that the index, compiled by British research firm Markit, has been above the watershed of 50 that divides expansion and contraction.

Three-month copper on the London Metal Exchange rose $60 to $6,540 a tonne by 0703 GMT, paring Friday's loss of 2.8 percent. Copper ended the month up 5.2 percent, recouping September's loss of 4.9 percent.

Shanghai's benchmark third month contract fell 400 yuan to 50,800 amd dipped as low as 50,150 yuan after ending October up 6.3 percent.

"We are seeing some pricing at around 50,000 yuan. Some consumers are willing to price at that level. But in spite of the strong China data, physical consumption remains a little soft," a trader in Shanghai said.

"The PMI won't have a huge impact on sentiment. In our view the Shanghai stock market is probably the biggest influence in our time zone."

LME copper stocks rose 800 tonnes to 372,200, their highest level in more than five months, after a slight fall on Thursday.

Shanghai equities rose 2.7 percent, shrugging off the bearish lead from Wall Street in the previous session.

Copper stocks monitored by the Shanghai Futures Exchange rose 7 percent from a week earlier, but it was zinc stocks that stole the limelight, soaring to 145,536 tonnes from 117,706 tonnes. [ID:nBJD003178

Traders said the surge was a result of a stockholder putting material into the exchange to exploit stronger prices and the 300-400 yuan contango between the first and the third month, which covers the cost of storage, insurance and interest on the metal.

"We expect more stocks to flow in as the contango is very large. But the buying interest from speculators is still strong, despite the stocks rise," the Shanghai trader said.

Shanghai zinc fell 0.7 percent to 16,720 yuan, off an early low of 16,350 yuan.

LME metal rose $43 or 2 percent to $2,203, reversing Friday's 1.4 percent decline. LME zinc ended October 9.7 percent higher its biggest monthly rise since July, while Shanghai futures rose 9.8 percent, their strongest since March.

LME aluminium rose $6 to $1,916, while its Shanghai counterpart ticked down a third of a percent to 15,185 yuan.

Russia's UC RUSAL, the world's biggest aluminium producer, has signed a deal to supply 1.68 million tonnes of the metal to China North Industries Corporation (NORINCO) in 2010-16, the companies said on Monday. Base metals prices at 0703 GMT Metal Last Change Pct Move End 2008 Pct chg 09 LME Cu 6540.00 60.00 +0.93 3060.00 113.73 SHFE Cu* 50800.00 -400.00 -0.78 23840.00 113.09 LME Alum 1916.00 6.00 +0.31 1535.00 24.82 SHFE Alum* 15185.00 -50.00 -0.33 11540.00 31.59 COMEX Cu** 294.10 -0.65 -0.22 139.50 110.82 LME Zinc 2203.00 43.00 +1.99 1208.00 82.37 SHFE Zinc 16720.00 -110.00 -0.65 10120.00 65.22 LME Nickel 18300.00 50.00 +0.27 11700.00 56.41 LME Lead 2319.75 14.75 +0.64 999.00 132.21 LME Tin 0.00 -14700.00 -100.00 10700.00 -100.00 LME/Shanghai arb^ 1446 Dollar/yuan 6.8279 \ 6.8303 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month